UH-OH: Global Bellwether FedEx Just Cut Guidance

FedEx, the
global package delivery company, just announced its fiscal Q3
financial results, and at first glance it's not encouraging.

Adjusted earnings came in at $1.23 per share, which is way below
the $1.38 expected.

"The third quarter was very challenging due to continued weakness
in international air freight markets, pressure on yields due to
industry overcapacity and customers selecting less expensive and
slower-transit services,” said CEO Fred Smith.

Management blames Asia, which also forced them to slash forward
guidance.

They cut Q4 EPS guidance to a range of $1.90 to $2.10.
Analysts were looking for $2.12.

"Our lower-than-expected results
for the quarter and reduced full-year earnings outlook were
driven by third quarter international revenues declining
approximately $100 million versus our guidance primarily due to
accelerating customer preference for lower-yielding international
services, lower rate per pound and weight per shipment,”
said CFO Alan B. Graf Jr. “We expect these international revenue
trends to continue. We have other actions under way beyond those
already included in our profit improvement program. Some of these
additional actions may involve temporarily or permanently
grounding aircraft, which could result in asset impairment or
other charges in future periods."

"In response, beginning April 1, FedEx Express will decrease
capacity to and from Asia and will aggressively manage traffic
flows to place low yielding traffic in lower-cost networks," said
Smith.